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Whole Foods (WFM) is taking a dive this morning after an ugly fiscal third quarter; shares of WFM stock are down about 7% today as a result.

But miserable Whole Foods earnings are only the beginning. The organic food grocer is down about 37% so far in 2014 with no bottom in sight, making it one of the worst-performing stocks in the S&P 500.

The slowing sales and increased competition at WFM stock are serious signs of concern that mean today’s pain is just part of a larger downtrend, and Whole Foods earnings will continue to suffer.

Here’s why you should sell Whole Foods stock now:

Whole Foods Earnings Details

Whole Foods earnings showed decent profits, with fiscal Q3 profits of 41 cents per share. That topped expectations … however, revenue fell short of forecasts by a hair at $3.38 billion vs. $3.39 billion in forecasts.

That doesn’t sound like a big miss on sales, and admittedly WFM beat on the top line. However, Whole Foods has been a dog this year, and investors really aren’t willing to give the company the benefit of the doubt.

The fact that Whole Foods is having trouble even hitting that weaker guidance is not a good thing.

Sell WFM Stock

There are those who think that this could be a great buying opportunity after the flop, now that valuations are a bit more reasonable with the forward P/E on WFM back to around 21.

However, Whole Foods still is exorbitantly overpriced compared with other grocers. Kroger (KR) and SuperValu (SVU) both have a forward P/E of about 14.

Furthermore, competition in the organics space is fierce both from direct upscale competitors like privately held Trader Joe’s and recently publicSprouts Farmers Market (SFM) as well as conventional grocery stores like Walmart (WMT) that are pushing into organics with earnest.

The problem for Whole Foods is that the valuation still is stretched, expectations were unfairly high and competition is fierce.

Despite the fact that WFM stock is still up 200% in the past five years even after this recent flop, investors would be wise to move on to greener pastures as soon as possible.